Robin Robins Producers Club - Feb 2016
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Chris Day, CEO of IT Glue, presents on the value of process and documentation to MSPs. This was presented at the Robin Robins Producers Club in Nashville, TN on Feb 12th 2016.
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Robin Robins Producers Club - Feb 2016
- 2. This is the presentation formerly known as ”Killer Documentation Will Set You Free” --Chris Day, CEO, IT Glue
- 3. • 2002 – Founded MSP Fully Managed • 2008 – 10 Employees • 2016 – 60 Employees • EBITDA from 5% to 25%. Why? MY MSP STORY
- 4. THE IT GLUE STORY • Founded in 2013 • 1,000+ Partners • 15,000+ IT Pros • 25 Employees • 17 Countries, 6 Continents
- 6. The first company in any industry that fully embraces the LEAN methodology will dominate their industry over the long run. LEAN BUSINESS MANAGEMENT
- 7. --Eric Ligman, Director, Worldwide Partner Group, Microsoft WASTE IN I.T.
- 8. The first and foremost reason for documenting any process is the fact that it… AMBIGUITY IS (NOT) AWESOME reduces operational ambiguity. --Management Study Guide
- 9. “the knowledge worker spends about 2.5 hours per day or roughly 30% of the workday, searching for information” KNOWLEDGE WORKER STUDY
- 11. What makes a best-in-class MSP? …and what does best-in-class really mean anyway?
- 12. Revenue $2,000,000 100% COGS Gross Profit SG&A Net Income COMPANY “A” VS. COMPANY “B”
- 13. COMPANY “A” Revenue $2,000,000 100% COGS $700,000 35% Gross Profit $1,300,000 65% SG&A $800,000 40% Net Income $500,000 25% BOOM!
- 14. COMPANY “B” Revenue $2,000,000 100% COGS $1,200,000 60% Gross Profit $800,000 40% SG&A $800,000 40% Net Income $0 0% FAIL!
- 16. Process People Technology 3 AXES OF EXCELLENCE
- 17. Process People Technology 3 AXES OF EXCELLENCE
- 18. People don't buy what you do; they buy why you do it. –Simon Sinek PEOPLE
- 19. Process People Technology 3 AXES OF EXCELLENCE
- 20. TECHNOLOGY
- 21. Process People Technology 3 AXES OF EXCELLENCE
- 22. PROCESS PAYS Reduce your costs Increase your margins Improve your service Reduce your risk
- 23. COST OF BAD DOCUMENTATION Team Size Technical /Staff 5 Average Annual Salary For All Employees $60,000 Average Hourly Labor Rate Fully Burdened + 15%, Rounded Down $43/Hour Time Wasted Due to Bad Documentation Experts Estimate @ 20-30% 20% / 10% / 5% (high/medium/low) Monthly Cost of Time Waste (Number of Tech Staff) x (1 Week Labor) x (Time Wasted) $6,880 / $3,440 / $1,720 (high/medium/low) Monthly Opportunity Cost Based on 50% GM = (Monthly Cost of Time Waste) x 2 $13,760 / $6,880 / $3,440 (high/medium/low) Total Monthly Cost of Bad Documentation (Monthly Cost of Time Waste) + (Monthly Opportunity Cost) $20,640 / $10,320 / $5,160 (high/medium/low) Total Annual Cost of Bad Documentation (Monthly Cost of Time Waste) x 12 $247,680 / $123,840 / $61,920 (high/medium/low)
- 24. IMPACT OF TIME VARIANCE Sample Tickets 1. Setup New User Account 2. Troubleshoot a Slow Computer 3. Deploy a New Workstation Estimated # Transactions Annually Based on 50 Customers, Avg. 20 Staff (1000 Users/Endpoints) 300 Transactions Estimated Hours Per Transaction Total Labor Required for Each Transaction 0.5 to 2.0 Hours Total Annual Cost (All Transactions) # Transactions x Time x Hourly Cost ($43/Hour) $6,450 to $25,800 Potential Savings w/ Good Documentation High - Low $19,350 Wow!
- 25. IMPACT OF LABOR COSTS Sample Tickets 1. Setup a New Complex User/Workstation 2. Deploy a Switch, Firewall or Backup Device Estimated # Transactions Annually Based on 50 Customers, Avg. 20 Staff (1000 Users/Endpoints) 250 Transactions Estimated Hours Per Transaction Total Labor Required for Each Transaction 2.0 Hours Range of Labor Costs Per Hour Variance from $35,000 to $95,000 + Overhead $25/hour to $68/hour Total Annual Cost (All Transactions) # Transactions x Time x Hourly Cost $12,500 to $34,000 Potential Savings w/ Good Documentation High - Low $21,500 Wow!
- 26. COST OF A NEW HIRE New Hire Efficiency Time & Cost of a New Employee Efficiency of New Hire Due to Bad Documentation Based on $60,000 Fully Burdened Salary, Level 2 Engineer 80% @ 4 Weeks to 80% @ 10 Weeks Hours Wasted Due to Bad Documentation Time Spent Training, Researching, “Shoulder-Tapping” 98 to 272 Setup Cost for New Employee Hours Wasted x Hourly Cost ($43/Hour) + Opportunity Cost $12,642 to $35,088 Potential Savings w/ Good Documentation High - Low $22,446 Wow!
- 27. ANNUAL SAVINGS (3 EXAMPLES) Area of Waste Potential Annual Savings (1,000 Endpoint MSP) Time Variance Variance in Time Required for Common Tasks $19,350 Labor Costs Tasks Requiring Level 1 vs. Level 2 vs. Level 3 Engineer $21,500 New Hire / X-Training Assuming Single New Hire @ $60K Salary $22,446 Potential Savings w/ Good Documentation High - Low $63,296 Wow!
- 28. THANK YOU!